Auditing

Individual Case Study

Pipers Brook Parts Pty Ltd manufactures specialised machinery parts for the mining industry. It particularly specialises in parts for machinery involving iron ore extraction and pelletisation.

The following information applies to Pipers Brook Parts sales system:

• Orders are received at the sales order department by telephone or email or via a sales consultant working in the field.
• Data-entry clerks key in the order via the terminals located in that department.
• Orders are subject to various computer edit checks on the terminal. Orders that satisfy all edit criteria except the credit limit test are recorded on a file for review by the credit control clerk for her approval. Orders that fail any of the other edit criteria are not accepted by the system. Rejected orders are noted by the data entry clerk and passed to the departments supervisor for investigation.
• Picking slips are printed in the dispatch office and then forwarded to the warehouse by the dispatch supervisor. A storeperson picks and assembles the orders. If goods are not in stock the storeperson alters the picking slip quantity to reflect the actual goods picked. The storeperson then initials the picking slip prior to forwarding it together with the goods to dispatch.
• Using a terminal located in dispatch, the dispatch clerk agrees the picking slip to physical goods picked, making adjustments for any stock-outs, before printing the invoice. The dispatch supervisor agrees the details of the goods invoiced to the picking slip. The supervisor then initials a copy of the invoice before forwarding it to the accounts department.
• Two copies of the invoice are sent with the goods. Once copy of the invoice serves as a delivery docket, endorsed by the customer on delivery and returned to dispatch by the delivery driver.
• At the end of each day, the accounts receivable master file is updated.

Required

Using the provided excel spreadsheet/working paper:

a. Identify and explain three (3) key controls in Pipers Brook Parts sales system.

b. For each of the three key controls identified in part a above, design one (1) appropriate test of control you would use.

NO.	Key Control and explanation (part a)	Test of Control and explanation (part B0
1
2
3